The correct answer is Salamat 1 is true and statement 2 is false. Statement 1 suggests that XYZ would accept the project based on the project's present value and the NPV rule.
It is an accurate statement because the NPV of the project is more significant than 0, which implies that the project would create value for the company. Statement 2, on the other hand, is incorrect because the payback period of the project is more than two years, which exceeds the company's payback threshold of two years.
The payback period is the time it takes for the project to recoup its initial investment. When the payback period exceeds the payback threshold, the project is typically not accepted. The assertion that statement 1 is correct and statement 2 is incorrect is, therefore, the right response. In conclusion, the project in question would be accepted based on the NPV rule because its NPV is more significant than zero, but it would be rejected based on the payback rule because the payback period is longer than the company's payback threshold of two years.
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Free cash flow (FCF) and net income (NI) differ in the following ways:
I) Net income accrues to shareholders, calculated after interest expense; free cash flow is calculated before interest.
II) Net income is calculated after various noncash expenses, including depreciation; FCF adds back depreciation.
III) Capital expenditures and investments in working capital do not appear in net income calculations; however, they do reduce free cash flows.
IV) Net income is never negative; free cash flows can be negative for rapidly growing firms, even if the firm is profitable, because investments can exceed cash flows from operations.
a.
I only
b.
I and II only
c.
I, II, and III only
d.
I, II, III, and IV
Answer:
c. I, II, and III only
Explanation:
As we know that
Free cash flow = Earnings before Interest and Taxes × (1-Tax Rate) + Amortization and Depreciation expense - Change in Net Working Capital -Capital Expenditure
And, the Net income is determined after considering all cash and non cash expenses.
Therefore, I, II and III statements are considered
Hence, the option c is correct
2-3 personal experience of exploitation as a consumer
Answer:
Explanation:
Exploitation often involves a denial of an individual's right (in this case a consumer's right).
Consumers are often exploited in this three areas:
Poor quality standard: For example, one may purchase an electronic device, which in most cases the quality level is determined only after using the product and then discover that the product has failed to meet expectations like performance failure.
High Prices: This is often happens when a consumer isn't aware of the average price of a particular product and may be the taken advantage of by the seller.
False or Incomplete product description: Online shopping often presents this type of exploitation. For example, an individual may buy a wrist watch he thinks is made of silver, but receives the item an discover it is actually made of rubber material.
The point at which birth and death rates balance is called
A Census growth
B Balancing growth
C zero population growth
Answer:
B balancing growth
Explanation:
When Kevin bought his condominium, he got his mortgage through his credit union. The mortgage was a personal, amortized loan for $91,000, at an interest rate of 3.25%, with monthly payments for a term of 25 years. For each part, do not round any intermediate computations and round your final answers to the nearest cent. If necessary, refer to the list of financial formulas. (a) Find Kevin's monthly payment x X 5 ? (b) If Kevin pays the monthly payment each month for the full term, find his total amount to repay the loan. (c) If Kevin pays the monthly payment each month for the full term, find the total amount of interest he will pay.
(a) To find Kevin's monthly payment, we can use the formula for the monthly payment on an amortized loan:
Monthly Payment = (P * r ) / (1 - (1 + r)^(-n))
r = 0.0325 / 12 = 0.002708333
n = 25 * 12 = 300
Monthly Payment = (91,000 * 0.002708333) / (1 - (1 + 0.002708333) ^ (-300))
= $454.43
To find Kevin's monthly payment multiplied by 5, we just multiply the monthly payment by 5:
Monthly Payment × 5 = $454.43 × 5 = $2,272.15
Kevin's monthly payment × 5 is $2,272.15.
(b) If Kevin pays the monthly payment each month for the full term, the total amount he will repay is equal to the monthly payment multiplied by the total number of payments:
Total amount repaid = Monthly Payment × n
= $454.43 × 300
= $136,329.00
(c) If Kevin pays the monthly payments each month for the full term, the total amount of interest he will pay is equal to the total amount repaid minus the principal amount:
Total Interest Paid = Total Amount Repaid - P
= $136,329 - $91,000
= $45,329.00
The total amount of interest Kevin will pay over 25 years is $45,329.
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suppose that the economy is currently below its long-run equilibrium output. which of the following is an example of monetary policy that can move the economy back toward full employment equilibrium?
Monetary Policy Example: One example of a monetary policy that can move the economy back toward full employment equilibrium is lowering the benchmark interest rate.
When the economy is operating below its long-run equilibrium output, it indicates a state of recession or a lack of aggregate demand. In such a situation, the central bank can implement expansionary monetary policy to stimulate economic activity and move the economy towards full employment equilibrium.
By lowering the benchmark interest rate, the central bank aims to reduce borrowing costs for businesses and individuals. This encourages increased borrowing and spending, leading to higher investment, consumption, and overall aggregate demand in the economy. As a result, businesses expand production, hire more workers, and consumer spending increases, ultimately helping to close the output gap and move the economy towards full employment equilibrium.
Lower interest rates can also incentivize borrowing for investment purposes, promoting capital expenditures and stimulating economic growth. Additionally, reduced borrowing costs can lead to lower mortgage rates, encouraging home purchases and supporting the housing market, which has spillover effects on related industries.
It's important to note that this is just one example of a monetary policy tool, and the effectiveness of any policy measure depends on various factors, such as the state of the economy, market conditions, and other complementary fiscal policies. Central banks employ a range of tools to manage monetary policy, including open market operations, reserve requirements, and quantitative easing, among others, to influence interest rates and overall economic activity.
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suppose that the economy is currently below its long-run equilibrium output. which of the following is an example of monetary policy that can move the economy back toward full employment equilibrium?
The function f(x) = 2,000(1 + )12t models the balance in a savings account.
The savings account had an initial balance of _ and compounds
_ at an interest rate of _
Answer:
In the exponential function f(x) = P(1 + )nt :
P = principal value
r = the annual interest rate
n = number of compounding periods in a year
t = time in years
For the given function, P = 2,000, r = 0.0225, or 2.25%, and n = 12. So, the interest compounds 12 times a year, or monthly.
Therefore, the savings account had an initial balance of $2,000 and compounds monthly at an interest rate of 2.25%.
Explanation:
Explanation from PLATO
Question 2
5 pts
Which of the following is intended to complete the sale after other promotional
types have attracted the customer to the product?
O Public relations
Advertising
Upc
forr
bef
O Sales promotion
O Personal selling
RE
Answer:
nose
Explanation:
A ________ is purposeful, specifying what an organization wants to accomplish in the larger environment. Group of answer choices
Answer:
Mission statement.
Explanation:
A company's mission statement is an essential part of business, and must be well defined and precise, as it is in the company's mission that its identity is contained, that is, who the company is and what is the purpose of its existence, for that it is recognized as an institution with well-founded objectives.
The mission will guide the business as a fundamental premise of how the company operates in the market and how employees should conduct themselves to achieve their objectives and goals.
Advertising, like any part of the promotional mix, can be managed by following several steps. What are two of those steps?.
Advertising, like any part of the promotional mix, can be managed by following several steps. Executing and Evaluating are those two steps.
The most important step in putting an advertising plan into action is execution. In this stage, an advertisement is carefully examined and put in the appropriate media while taking the advertising goals into account.
Creative executions are components that advertisers use more to draw attention than to enlighten consumers about a product or brand. Athlete or celebrity endorsements, humor, fanciful imagery, and words or visuals that evoke strong emotions like shock, fear, or warmth are a few examples.
A planned advertising program's effectiveness in terms of sales, elevated brand awareness, expanded distribution, or other program goals are measured through advertising campaign evaluation.
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Morgan and Dana are partners. The partnership capital for Morgan is $50,000 and for Dana is $60,000. Townsend is admitted as a new partner by investing $40,000 cash. Townsend is given a 25% interest in return for her investment. The amount of the bonus to the old partners is
Answer:
$2,500
Explanation:
Given the following:
Old partners :
Morgan's partnership capital = $50,000
Dana's partnership capital = $60,000
New partner :
Townsend's partnership capital = $40,000
Total partnership capital :
Old partner + new partner
$(50,000+60,000+40,000) = $150,000
Townsend's investment return :
25% of total partnership investment
0.25 × $150,000 = $37,500
Bonus to old old partners:
Townsend's investment capital - Townsend's return
$(40,000 - 37,500) = $2,500
Bonus to old partners = $2,500
Which of the following is not a form of business combination?: (A) Acquisition. (B) S Corporation. (C) Conglomerate. (D) Merger.
Answer:
b.corporation is answerYour firm manaagemed to get a government contract to supply the City of Atlante with 26,000 with tons of steel annually for a need an initial \$4,500,000 in frastructure development. You have estimated that your firm will for five years. The an $400,000 investment in the new machinery to get started; the project will list per ton; accoun. The annual fixed costs will be $515,000, and that variable costs shoukd be $295 year project life. At will depreciate the initial asset investment straight-line to zero over the 5 selling price of the eque end five years, the equipment will be dismantled, and the estimined selling price of the equipment is $275,000 after dismantling costs. The City of Atlanta will pay your firm a selling price of $385 per ton. The project will increase the firm's working capital needs by $400,000, recovered when 10. Suppose you believe that the projections for the selling price, and the fixed and variable costs are accurate only to within +/−4%, what is the NPV in the worst-case scenario for this project? a. −$2,189,899.01 b. −$2,170,694.86 c. −$982,153.36 d. −$1,077,885.59 c. None of the above
The NPV in the worst-case scenario for this project is approximately -$2,189,899.01.
To calculate the worst-case scenario NPV (Net Present Value) for this project, we need to consider the given information and assumptions. Let's break down the steps:
Calculate the annual revenue from selling steel:The City of Atlanta will purchase 26,000 tons of steel annually at a selling price of $385 per ton. Therefore, the annual revenue can be calculated as 26,000 tons * $385/ton = $9,010,000.
Calculate the annual fixed costs:The annual fixed costs are given as $515,000.
Calculate the annual variable costs:The variable costs are estimated to be $295 per ton. Therefore, the annual variable costs can be calculated as 26,000 tons * $295/ton = $7,670,000.
Calculate the annual depreciation expense:Since the equipment will depreciate straight-line to zero over the 5-year project life, the annual depreciation expense will be the initial investment divided by the project life: $400,000 / 5 = $80,000.
Calculate the salvage value:The estimated selling price of the equipment after dismantling costs is $275,000.
Calculate the working capital recovery:The working capital needs will increase by $400,000 and will be recovered when the project ends after 5 years.
Now, let's calculate the worst-case scenario NPV by considering the given ranges of accuracy:
a. Selling price accuracy: +/−4%
b. Fixed and variable costs accuracy: +/−4%
We will calculate the NPV for both the upper and lower ranges of accuracy to determine the worst-case scenario.
Upper range:
Revenue: $9,010,000 * (1 + 4%) = $9,364,400
Fixed costs: $515,000 * (1 + 4%) = $535,600
Variable costs: $7,670,000 * (1 - 4%) = $7,364,800
Lower range:
Revenue: $9,010,000 * (1 - 4%) = $8,655,600
Fixed costs: $515,000 * (1 - 4%) = $494,600
Variable costs: $7,670,000 * (1 + 4%) = $8,001,600
Now, we can calculate the worst-case scenario NPV using the worst-case revenue, costs, salvage value, depreciation, and working capital recovery:
Worst-case scenario NPV = (Revenue - Fixed Costs - Variable Costs - Depreciation) * (1 - Tax Rate) + Salvage Value - Working Capital Recovery
Assuming a tax rate of 35%, the calculation becomes:
Upper range NPV = ($9,364,400 - $535,600 - $7,364,800 - $80,000) * (1 - 0.35) + $275,000 - $400,000 = -$2,189,899.01
Lower range NPV = ($8,655,600 - $494,600 - $8,001,600 - $80,000) * (1 - 0.35) + $275,000 - $400,000 = -$2,170,694.86
Therefore, the worst-case scenario NPV for this project is approximately -$2,189,899.01, which corresponds to option (a) in the provided answer choices.
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Which one of the following statements about the federal budget deficit is correct?
A. The federal budget deficit is found by subtracting government tax revenues plus government borrowing from government spending in a particular year.
B. The federal budget deficit is found by cumulating the differences between government spending and tax revenues over all years since the nation's founding.
C. The federal budget deficit is found by subtracting government revenues from the noninvestment-type government spending in a particular year.
D. The federal budget deficit is found by subtracting government tax revenues from government spending in a particular year.
The federal budget deficit is found by subtracting government tax revenues from government spending in a particular year.
The correct option is (D)
What is mean by the federal budget deficit?
A deficit occurs when the federal government's spending exceeds its revenues. The federal government has spent $336.41 billion more than it has collected in fiscal year (FY) 2023, resulting in a national deficit.
Example of budget deficit :
A budget deficit occurs when a government spends more in a given year than it collects in revenues, such as taxes. As a simple example, if a government takes in $10 billion in revenue in a particular year, and its expenditures for the same year are $12 billion, it is running a deficit of $2 billion.
Now, According to the above statement:
The federal budget deficit is found by subtracting government tax revenues from government spending in a particular year.
The correct option is (D).
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what is false regarding the two methods for recording inventories in governmental funds?
The false statement is a. The purchases method is preferable since it requires no adjustment to supplies expenses when preparing the government-wide statements
The purchases method tracks the cost of purchasing inventory goods as an expense. When creating the financial statements for the entire government, no extra modifications are necessary. The modified accrual basis of accounting, which is different from the accrual basis used in commercial accounting, is utilised for government funding. Inventories are not recorded as assets on the balance sheet when using the modified accrual basis.
When they are bought or consumed, they are instead reported as expenditures or expenses. The consumption technique and the acquisitions method are the two approaches used to report inventories in public finances. Governmental fund inventories are often kept for distribution or use in the regular course of business, such as materials for construction projects or supplies for public services.
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Complete Question:
What is false regarding the two methods for recording inventories in governmental funds?
a. The purchases method is preferable since it requires no adjustment to supplies expense when preparing the government wide statements
b. They are held for sale or distribution in the ordinary course of operations
discuss the relationship between public managers and private
stakeholders, as well as their responsibility in facilitating
service delivery to the country.
Public managers collaborate with private stakeholders to facilitate service delivery and have a responsibility to engage, establish transparent processes, and balance interests for effective outcomes.
What is the relationship between public managers and private stakeholders, and what is their responsibility in facilitating service delivery to the country?The relationship between public managers and private stakeholders plays a crucial role in facilitating service delivery to the country.
Public managers are responsible for overseeing and implementing public policies and programs, while private stakeholders, such as businesses and non-governmental organizations, have a vested interest in the outcomes of these policies and programs.
Public managers have the responsibility to engage and collaborate with private stakeholders to ensure effective service delivery.
This collaboration can involve partnerships, consultations, and negotiations to leverage the expertise, resources, and innovative ideas of private stakeholders.
By involving private stakeholders in the decision-making process, public managers can benefit from their knowledge and insights, leading to more efficient and effective service delivery.
Overall, the relationship between public managers and private stakeholders is a critical factor in facilitating service delivery.
By actively engaging with private stakeholders, public managers can tap into additional resources, expertise, and perspectives to improve the quality and effectiveness of public services.
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Which of the following is more likely to occur when there are high barriers to-entry-in an industry? (A) The firm(s) in the industry earn economic profits in the long run. (B) The industry will be characterized by diseconomies of scale. The firm(s) in the industry are price takers. (D) The firm(s) in the industry will charge a price equal to average total cost. (E) The firm(s) will charge a price on the inelastic portion of the demand curve.
A likely occurrence when there are high barriers to entry in an industry is A) The firm(s) in the industry earn economic profits in the long run.
What happens when there are high barriers to entry?When there are high barriers to entry into an industry, it means that there won't be many companies going into that industry. This keeps supply low because there are a few companies involved.
As a result of this low supply or limited suppliers, the companies can have control over pricing. This allows them to charge a price that will give them economic profits in the long run.
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Each tile shows an investors tax bracket
What is one major function of retail banks?
A. Keeping all deposits in reserve at all times
B. Offering loans that use car titles as collateral
C. Providing credit and debit cards to customers
D. Managing the payroll of major corporations
SUBMIT
Answer:
The role of retail banking is to help individual consumers manage their money, gain access to credit, and deposit their money in a secure way.
Explanation:
Providing credit and debit cards to customers is a major function of retail banks. Hence, the correct answer is option C.
What are retail banks?Retail banks are financial institutions that provide banking services to individuals and small businesses. These services include deposit accounts, such as savings and checking accounts, as well as loans, mortgages, credit and debit cards, and other financial products.
Providing credit and debit cards to customers is a major function of retail banks because it allows customers to make purchases without the need for cash and helps facilitate online and mobile payments. Credit and debit cards also generate revenue for retail banks through fees and interest charged on balances, making them an important source of income for banks.
Hence, providing credit and debit cards to customers is a major function of retail banks. Therefore, the correct answer is option C.
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explain how the frs decision to lower short-term interest rates to near zero caused ad to shift to the right.
The method used to reduce interest rates is to rotate money according to the money cycle. Not printing as much money as possible can also lower interest rates. This can also cause inflation.
Inflation is a process of an event, not the highs and lows of the price level. That is, a price level that is considered high does not necessarily indicate inflation. Inflation is an indicator to see the level of change, and is considered to occur if the price increase process takes place continuously and influences each other.
The term inflation is also used to mean an increase in the money supply which is sometimes seen as the cause of rising prices. There are many ways to measure the inflation rate, the two most frequently used are the CPI and the GDP deflator.
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please help, easy multiple choice question
whoops meant to put it in art
Answer: The answer that is correct is the last one, which is shape.
I hope this helped!
this year, ghj incorporated received the following dividends: bp incorporated (a taxable california corporation in which ghj holds a 2% stock interest) $ 17,300 mn incorporated (a taxable florida corporation in which ghj holds a 52% stock interest) 80,800 ab incorporated (a taxable french corporation in which ghj holds a 21% stock interest) 17,300 required: compute ghj’s dividends-received deduction.
To compute GHJ's dividends-received deduction, we need to consider the stock interest and type of corporation. The deduction is 50% of the dividend for taxable US corporations and 100% for taxable foreign corporations. Adding up the deductions gives us the total deduction amount.
1. For BP Incorporated, GHJ holds a 2% stock interest in a taxable California corporation. The dividend received is $17,300. Since it is a taxable corporation, GHJ can deduct 50% of the dividend amount, resulting in a dividends-received deduction of $8,650.
2. For MN Incorporated, GHJ holds a 52% stock interest in a taxable Florida corporation. The dividend received is $80,800. Since it is also a taxable corporation, GHJ can deduct 50% of the dividend amount, which is $40,400.
3. For AB Incorporated, GHJ holds a 21% stock interest in a taxable French corporation. The dividend received is $17,300. Since it is a foreign corporation, GHJ can deduct 100% of the dividend amount as a dividends-received deduction, resulting in a deduction of $17,300.
In order to calculate GHJ's dividends-received deduction, we need to analyze the stock interest GHJ holds in each corporation and determine if they are taxable or non-taxable corporations. GHJ holds a 2% stock interest in BP Incorporated, a taxable California corporation, and receives a dividend of $17,300. As it is a taxable corporation, GHJ can deduct 50% of the dividend amount, resulting in a deduction of $8,650.
GHJ holds a 52% stock interest in MN Incorporated, a taxable Florida corporation, and receives a dividend of $80,800. Similar to BP Incorporated, GHJ can deduct 50% of the dividend amount, which is $40,400.
In conclusion, GHJ's dividends-received deduction for this year is $66,350.
For MN Incorporated, GHJ holds a 52% stock interest in a taxable Florida corporation. The dividend received is $80,800. Since it is also a taxable corporation, GHJ can deduct 50% of the dividend amount, which is $40,400.
For AB Incorporated, GHJ holds a 21% stock interest in a taxable French corporation. The dividend received is $17,300. Since it is a foreign corporation, GHJ can deduct 100% of the dividend amount as a dividends-received deduction, resulting in a deduction of $17,300.
To compute GHJ's total dividends-received deduction, we add up the deductions from each corporation: $8,650 + $40,400 + $17,300 = $66,350.
Therefore, GHJ's dividends-received deduction for this year is $66,350.
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In 2018, Smiths Corp. issued a $50 par value preferred stock that pays a 6 percent annual dividend. Due to changes in the overall economy and in the company's financial condition, investors are now requiring a 7 percent return. What price would you be willing to pay for a share of the preferred if you receive your first dividend one year from now?
Answer:
Hence, the Current Price is $42.85
Explanation:
Given that
Par value = $50
Annual Dividend percentage = 6%
Annual dividend = $50 × 6% = $3
Required rate of return = 7%
based on the above information
The price that should be paid one year from now is
Required Return = Annual Dividend ÷ Current Price × 100
7 = $3 ÷ Current Price × 100
So, the current price is
= $42.85
Hence, the Current Price is $42.85
Thomas creates a testamentary trust to pay the income to his son, Daniel, for life
and to distribute the remainder to whomever Daniel appoints in his will, in
default of appointment by Daniel to his issue per stirpes. Thomas dies on March
13. Daniel has a heart attack and dies on April 15.
b. Could Daniel avoid this result? How? Should Daniel do this?
Daniel could have avoided the default distribution by making a specific appointment in his will, thereby directing the distribution of the trust's remainder to a specific individual or individuals of his choosing.
To avoid the result where the remainder of the trust passes to Daniel's issue per stirpes, Daniel could have exercised his power of appointment. By appointing someone other than his issue in his will, he could have directed the distribution of the trust's remainder according to his own wishes. This would have allowed him to control the ultimate disposition of the trust assets.
Whether Daniel should have taken this action depends on his personal circumstances and preferences. If he had specific intentions regarding the distribution of the trust's assets and desired to ensure that they are carried out accordingly, he might have chosen to exercise his power of appointment. On the other hand, if he had no strong preferences or trusted his issue to handle the assets responsibly, he might have been content with the default provision. Hence, the decision for Daniel to exercise his power of appointment would have been a personal one, based on his individual circumstances and preferences.
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If having a warranty on a car is important, a person should buy a car that is --------?
Answer:
New
Explanation:
A warranty is a vehicle manufacturer's promise to rectify faults that may occur during the warranty period. A vehicle warranty covers the car and any accessories fitted by the manufacturer. It caters to both labor and parts.
Warranty is issued to new products only. If one considers a warranty to be important, they should buy a new car.
Explanation
If having a warranty on a car is important, a person should buy a car that is
new
.
Not super sure about this question....
Answer:
Don't use the word super. Being sure is either you know or don't know.
Explanation:
Just ask a repeat of the question and then if you are unsure, tell the teacher.
A restaurant plans to use a new food delivery service. The food delivery service charges $5. 48 for every 2 meals delivered, plus a $3. 50 service fee. What is the slope of this situation?.
Based on the amount the food delivery service charges for every 2 meals delivered, the slope of this situation is $2.74.
How to find the slope?The slope of a situation refers to the change in the dependent variable as a result of a unit change in the independent variable.
The independent variable in this situation is the number of meals delivered so the slope will be the amount that the food delivery service charges for every meal that they deliver.
You may get the slope of the line by determining the rise and the run using two of the line's points. The rise and the run are terms used to describe changes in height between two places. Rise divided by Run gives you the slope. Rise + Slope = Rise + run = slope.
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Which view is used to enter data into an Access table by default?
Datasheet
Grid
Design
Layout
The answer is Datasheet.
What is the datasheet view?A web datasheet view in an Access app displays online data arranged in rows and columns in a web browser. It can allow data edits or not, as you prefer. When you create a web datasheet view in Access, it opens in Design View, where you can set the record source.
Which view is used to display the data of the table?In relational databases, data is structured using various database objects like tables, stored procedures, views, clusters, etc. This article aims to walk you through 'SQL VIEW' – one of the widely-used database objects in SQL Server.
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What aspects of managing your account were probably more difficult before online banking was available?
Answer:
One of the main advantages of online banking is that you can access information about your account immediately and from anywhere. Before online accounts were available, you had to go to a bank or ATM on some specific cases if you wanted to carry out any type of transaction, e.g. pay a service or transfer money. Online accounts make it less likely for a person to go to a bank, e.g. in order to get a loan, I did it all online, I didn't even need to go to the bank.
Phishing, Identity Theft, Keylogging, and Pharming were arguably more difficult aspects of maintaining your account before internet banking was available.
Online bankingOnline banking, often called the internet banking, online banking, or home banking, is just an electronic account that allows bank or other commercial bank customers to execute a variety of financial transactions through the institution's website.
Prior to the availability of online banking, managing the account was undoubtedly more complex. Aspects are as follows:
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What is the difference between a routine and a major decision
Answer: routine decision- the type made every day without much though
planned decision- use more time and energy to make the best choice
Explanation: i really hoped it helped.
On January 1, the first day of the fiscal year, a company issues a $1,450,000, 5%, five-year bond that pays semiannual interest of $36,250 ($1,450,000 × 5% × ½), receiving cash of $1,408,720.
Complete Question:
On January 1, the first day of the fiscal year, a company issues a $1,450,000, 5%, five-year bond that pays semiannual interest of $36,250 ($1,450,000 × 5% × ½), receiving cash of $1,408,720
Journalize the first interest payment and the amortization of the related bond discount using the Straight line method
Answer:
Kindly check Explanation
Explanation:
Given the following :
Face value of bond issued = $1,450,000
Cash received on Issuance = $1,408,720
Number of Interest payment on bond = 5 × 2 = 10(semiannual)
Therefore, discount on bond :
$(1,450,000 - 1,408,720) = $41,280
Spreading or amortizing diacou t on bond over the bond duration (use te straight line method)
Discount / period
$41,280 / 10 = $4,128
Interest expense a/c Dr $40,378
To discount on bond payable a/c Cr $4128
To cash a/c $36,250